Hugo Boss AG · XETR:BOSS
Hugo Boss — Investor Day (November 2011)
37 slides from Hugo Boss's investor day presentation, Nov 8, 2011
Slide 1: HUGO BOSS
HUGO BOS S$
Slide 2: Group Strategy
Group Strategy Claus-Dietrich Lahrs, Chief Executive Officer November 8, 2011 HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 2 / 37
Slide 3: Agenda
AGENDA INTRODUCTION HUGO BOSS – A PREMIUM BUSINESS MODEL WITH LUXURY APPEAL DISTRIBUTION STRATEGY MEDIUM-TERM OUTLOOK HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 3 / 37
Slide 4: Agenda: Introduction
AGENDA INTRODUCTION HUGO BOSS – A PREMIUM BUSINESS MODEL WITH LUXURY APPEAL DISTRIBUTION STRATEGY MEDIUM-TERM OUTLOOK HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 4 / 37
Slide 5: HUGO BOSS – Defining premium in clothing and fashion
HUGO BOSS – Defining premium in clothing and fashion HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 5 / 37
Slide 6: HUGO BOSS – Record sales and profitability development
HUGO BOSS – Record sales and profitability development Sales and EBITDA before special items Sales EBITDA before special items (in EUR million) Sales EBITDA 600 2,000 1,729 1,686 1,632 1,562 450 1,496 1,500 350 272 300 275 267 1,000 233 150 500 0 0 2006 2007 2008 2009 2010 2011e HUGO BOSS Investor D
Slide 7: Agenda: A premium business model with luxury appeal
AGENDA INTRODUCTION HUGO BOSS – A PREMIUM BUSINESS MODEL WITH LUXURY APPEAL DISTRIBUTION STRATEGY MEDIUM-TERM OUTLOOK HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 7 / 37
Slide 8: A premium business model with luxury appeal
HUGO BOSS – A premium business model with luxury appeal 06 01 Distribution Brands Product 05 People Expertise 02 Operational Global Excellence Presence 04 03 HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 8 / 37
Slide 9: Brands – Targeting clearly defined consumer segments
01 BRANDS – Targeting clearly defined consumer segments Luxurious Premium Refined Casual Modern Modern Masculine Authentic Sophisticated Aesthetic HUGO BOSS Brand Portfolio Progressive Sportive Avant-garde Relaxed Contemporary Energetic Casual Urban Chic Contemporary HUGO BOSS Investor Day 2011 // G
Slide 10: Product Expertise – Unmatched expertise in high-end tailoring
02 PRODUCT EXPERTISE – Unmatched expertise in high-end tailoring reflected in dominant market positions HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 10 / 37
Slide 11: Global Presence – Renowned brands around the world
03 GLOBAL PRESENCE – Renowned brands around the world HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 11 / 37
Slide 12: Operational Excellence – A strong organizational backbone
04 OPERATIONAL EXCELLENCE – A strong organizational backbone HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 12 / 37
Slide 13: People – Industry-leading know-how
05 PEOPLE – Industry-leading know-how HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 13 / 37
Slide 14: Distribution – Retail sophistication and online expertise add to wholesale strength
06 DISTRIBUTION – Increasing Retail sophistication and Online expertise add to historical strength in Wholesale ONLINE RETAIL WHOLESALE HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 14 / 37
Slide 15: HUGO BOSS growth strategy
HUGO BOSS growth strategy STRENGTHENING MAXIMIZING INDIVIDUAL CONSUMER FOCUS BRAND TO DRIVE RETAIL IDENTITIES D.R.I.V.E.* STRIVING FOR EXPLOITING OPERATIONAL GLOBAL EXCELLENCE GROWTH OPPORTUNITIES *D.R.I.V.E. = Dynamic Retail Improvement & Vertical Expansion HUGO BOSS Investor Day 2011 // Group Stra
Slide 16: Project D.R.I.V.E. to support implementation of growth strategy
Project D.R.I.V.E. to support implementation of growth strategy 1 Consumer centric business model 2 ______ ______ ______ ______ ______ ______ 38 ______ 38 ______ Faster response to market changes Weeks Weeks Desirable brand 5 with best POS performance 3 Better and more focused assortment 4 1 Systema
Slide 17: Turning industry changes into opportunities
Turning industry changes into opportunities “The need for speed”: Accelerating fashion Consumer trends understanding makes Sourcing cost inflation or breaks brand success Fast development of new markets with Ongoing consolidation mono-brand retail in wholesale environments distribution Retail sophis
Slide 18: Agenda: Distribution Strategy
AGENDA INTRODUCTION HUGO BOSS – A PREMIUM BUSINESS MODEL WITH LUXURY APPEAL DISTRIBUTION STRATEGY MEDIUM-TERM OUTLOOK HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 18 / 37
Slide 19: Wholesale – Key facts
WHOLESALE – Key facts Full Year 2010 3% // Royalties 57% // Wholesale Multi Brand Franchise accounts for 17% // Franchise around a third of total vs. Franchise wholesale business 40% // Retail 40% // Multibrand 3,756 3,853 Number of wholesale 3,595 3,326 Numbers of accounts has decreased Accounts by
Slide 20: Wholesale – Capturing growth opportunities
WHOLESALE – Capturing growth opportunities ■ Competition in most major wholesale markets is tough … … but HUGO BOSS is best positioned for further growth Offering desirable brands Leveraging strength in core offerings across the brand portfolio Delivering the right product at the right place at the
Slide 21: Wholesale – Turning mono-brand wholesale space into own retail
WHOLESALE – Turning mono-brand wholesale space into own retail Rainbow (China, 34 stores, 2010) Takeover of Moss Bros (UK, 15 stores, 2011) Imaginex (China, 8+10, 2011/2012) franchise stores Chieh Ger (Taiwan, 10, 2012 ) Maximization of brand control Immediate earnings Takeover of Pohl
Slide 22: Retail – Significant increase in share of Group sales
RETAIL – Significant increase in share of Group sales Retail 24% 25% 27% 33% 40% 55% Wholesale 73% 72% 70% 64% 57% 43% Licenses 3% 3% 3% 3% 3% … 2% 2006 2007 2008 2009 2010 2011e 2015e HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 22 / 37
Slide 23: Retail – Continuing double-digit retail sales growth
RETAIL – Continuing double-digit retail sales growth over last 5 years Growth by channel +36% (in %) +35% +30% 24% 27% 33% +25% 40% +19% +16% +15% +14% +11% +12% +11% 73% 72% +9% +10% +10% 70% +7% 64% +3% +1% -1% -7% Group -15% -15% Retail Wholesale 2006 2007 2008 2009 2010 YTD Sep. 2011 HUGO BOSS I
Slide 24: Retail – The lead distribution channel
RETAIL – The lead distribution channel 01 Growth To contribute >70% of medium-term sales growth 02 Profitability Most important profitability driver 03 Investments To account for majority of investments until 2015 04 Brand Stores Strengthens brand perception across all channels 05 Processes Driver o
Slide 25: Retail – The HUGO BOSS retail universe
RETAIL – The HUGO BOSS retail universe EUROPE 292 AMERICAS ASIA/PACIFIC 120 179 Number of own retail stores as of September 30, 2011 HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 25 / 37
Slide 26: Retail – Thirteen core retail formats defined
RETAIL – Thirteen core retail formats defined BOSS BOSS format Core Core Black format format Man BOSS Man Men Man Man + Woman Mono-brand formats Multi-brand formats Orange Town Town Town Town Town Town Town Orange Orange HUGO HUGO Exclusive Exclusive Woman Man Man Man Man BOSS Black BOSS Mono format
Slide 27: Retail – Modularization allows tailored and flexible brand offering
RETAIL – Modularization allows tailored and flexible brand offering “M” Module “S” Module “XL” Module HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 27 / 37
Slide 28: Retail – Directly operated store universe
RETAIL – The HUGO BOSS directly operated store universe Freestanding Shop in Shop Total Number of stores (Sep 30, 2011) 219 290 509 Europe 110 147 257 Americas 26 60 86 Asia 83 83 166 Total Size (in sqm) 66,000 20,500 86,500 Average Size (in sqm) ~300 ~70 ~170 2010 revenues (in EUR million) 538 153
Slide 29: Retail – Ambitious store expansion plans
RETAIL – Ambitious store expansion plans ■ Significant potential for network expansion identified in all three Target to regions open around ■ Full pipeline of new projects 50 new stores every ■ Location and rent are key year ■ Comprehensive headquarter approval organically process HUGO BOSS Investo
Slide 30: Retail – Ongoing development initiatives in all fields
RETAIL – Ongoing development initiatives in all fields Supply Chain & Product Systems Personnel Distribution Operations Consumer- Implementation centric Reporting More flexible in- of store operations development enhancements season product manual process through Group- allocation based St
Slide 31: Retail – Core range a major productivity driver in Europe
RETAIL – Core range a major productivity driver in Europe Share of Core Range Value share of core range Units sold per style (Fall 2011) (in %) Core range style/colors as % of total collection style/colors 75% 67% 60% x 3.5 45% 45% 28% 30% 15% 15% Fall 2011 Spring 2012 Non Core Range Core Range HUGO
Slide 32: Retail – Building close relationships with our consumers
RETAIL – Building close relationships with our consumers HUGO BOSS CRM strategy and guidelines ■ Understand the consumer ■ Win new consumers Customer data collection & Analysis & segmentation Marketing planning CRM activities ■ Increase consumer loyalty quality ■ Increase frequency ■ Increase sales
Slide 33: Online – e-Commerce a powerful third distribution channel
ONLINE – e-Commerce a powerful third distribution channel ■ Constant improvement of usability, Online Sales (in EUR million) product assortment, presentation and 19.7 service features ■ Dedicated mono-brand sub-stores to 7.8 elevate consumer experience 0.5 2008 2009 2010 2011e ■ Several new store la
Slide 34: Agenda: Medium-term Outlook
AGENDA INTRODUCTION HUGO BOSS – A PREMIUM BUSINESS MODEL WITH LUXURY APPEAL DISTRIBUTION STRATEGY MEDIUM-TERM OUTLOOK HUGO BOSS Investor Day 2011 // Group Strategy HUGO BOSS © November 8, 2011 34 / 37
Slide 35: Recent Group performance has exceeded expectations
HUGO BOSS – Recent Group performance has exceeded internal and external expectations ■ Transition to a retail-driven business model quicker and more profitable than initially anticipated ■ Strong growth in China and the US ■ Broad-based recovery of wholesale business ■ Operational process improvemen
Slide 36: Outlook 2015 – Targeting profitable growth
OUTLOOK 2015 – Targeting profitable growth ■ Results development since 2009 has far exceeded Management’s original expectations … … giving us confidence for 2015! 2015 Sales 2015 EBITDA before (in EUR million) special items Sales and EBITDA before special items Sales (in EUR million) EBITDA before s
Slide 37: HUGO BOSS
HUGO BOS S$